11 Jun How to Choose a Loan
Choosing the right loan can be intimidating, especially if you don’t know which type best suits your needs. When choosing a loan you also have to consider why you want it, how much you’ll need to borrow, and the impact of interest rates on your repayments. At the Bank of the Lowcountry, we’ll help match you with the best loan that meets your requirements. Here are four types of loans that we offer.
Home Equity Loan
This type of loan gives you access to larger amounts of money; however, you use the market value (equity) of your home as collateral. It’s easier to qualify for a home equity loan if you have bad credit because your home is securing the loan, and the lenders have a way to manage their risk. However, you should be aware that other requirements put in place by the lenders may make it more difficult to borrow. This loan is most common for remodeling or renovating your home, or paying for your child’s college education.
Fixed Rate Loan
With this loan, you’ll pay the same fixed interest rate for a set period of time, usually 1-5 years. This is reassuring when interest rates go up because your rate will stay the same. However, when rates go down your rate will also stay the same, so you may end up paying more than necessary. A fixed rate loan is the best option for those who plan to stay in their home for several years. With a conventional fixed-rate mortgage, homeowners can pay a consistent and predictable amount each month.
Adjustable Rate Loan
Contrary to a fixed rate loan, where the interest rate stays the same during the life of the loan, the interest rate of an adjustable rate loan ‘adjusts’ to the market after a set period. Many borrowers find this loan more appealing than a fixed loan because of the upfront savings- initial interest rate and payments are lower. However, rates and payments can rise significantly over the lifespan of the loan.
If you have an excellent credit score and are looking to buy a high-priced or luxury home, the jumbo loan may be the right choice for you. This loan exceeds conforming loan limits set by the Federal Housing Finance Agency (FHFA), so it cannot be purchased. Instead, the jumbo loan has specific underwriting requirements. For more information about this specific loan, please contact one of our loan officers.
At the Bank of the Lowcountry, we know that applying for a loan can be stressful, that’s why we’re here to help. If you still have questions about the loans discussed in this post, or another loan not mentioned, please contact us at (843) 549-2265.